Citigroup has been fined $30m for passing an unpublished analyst’s research to a handful of valued clients, including embattled hedge fund SAC Capital, giving them an opportunity to trade on weaker sales of Apple’s iPhone ahead of other investors.

Kevin Chang, the Taipei-based analyst at the centre of the case who has been fired by the bank, was responsible for coverage of technology companies and suppliers including Hon Hai Precision Industry, a supplier to Apple.

After his competitors cut their Apple iPhone order estimates for Hon Hai, he received multiple email inquiries from hedge fund clients as to his thoughts on the forecasts, according to a consent order from the Massachusetts Securities Division.

An employee of SAC Capital wrote: “Hey Kevin, Are you picking up any order cuts to iPhone?” A stream of other emails demanding his views from hedge funds including Citadel and GLG Partners, and asset manager T Rowe Price, followed.

Mr Chang later forwarded the investors previews of unpublished research, in which he cut his Apple iPhone order forecasts by 26.7 per cent.

SAC Capital was the first to receive the unpublished research. The fund declined to comment, as did Citadel. GLG Partners had no immediate comment. T Rowe Price head of US equity, John Linehan, said that it believed the group had not traded on any material, non-public information.

The next day, on December 14, Mr Chang’s research was published to the market. It built on his unpublished forecasts and included “virtually identical information” according to the consent order.

The watchdog said SAC Capital, T Rowe Price and Citadel executed sales of Apple stock on December 13 and 14, adding that Apple’s share price fell 5.2 per cent between 9am and close of play on December 14. GLG did not sell any Apple shares during this period.

The hedge funds were not charged with wrongdoing but their role “is still being looked at and nothing has been ruled out”, said the regulator.

On December 16, Citigroup analysts downgraded Apple from “Buy” to “Neutral” citing demand weaknesses of the Apple iPhone 5 and hyperlinking to Mr Chang’s December 14 report, the consent order said.

The Massachusetts Securities Division also demanded a three-year review of disclosure policies at Citigroup’s global markets unit as a result of the case, which it said violated the bank’s own policies, as well as federal and state securities law.

“It seems that the concept that investors are to be presented with a level playing field when it comes to the product of research analysts is a lesson that must be learned over and over again,” said William Galvin, who heads the watchdog. “But it’s important that it should be taught as often as necessary.”

While Citigroup accepted the facts of the consent order, it neither admitted nor denied breaking the law.

Regulators have tried to crack down on the sharing of non-public research information that can lead to trading advantages for select clients by fining several Wall Street banks in recent years.

Citigroup has been reprimanded for several incidents. Last year, the bank was fined by the same Massachusetts watchdog after its unpublished research was shared with journalists. It fired the analysts involved.

In that instance, a junior analyst sent an early draft of a research note on the Facebook initial public offering to a friend at a techblog, violating rules.

But, Citigroup’s history of disclosure woes goes back to more than a decade ago when Eliot Spitzer, the then-New York attorney-general investigated Wall Street abuses in 2002.

On Thursday, Citigroup said: “We are pleased to have this matter resolved. We take our regulatory compliance requirements very seriously and train all of our employees about these obligations.”

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